The argument against U.S. companies investing abroad typically goes as follows: “Companies are just trying to substitute cheap foreign labor for expensive U.S. labor. The United States loses jobs, capital, and technology when companies go offshore to employ cheaper foreign labor.”
While that may be true for individual companies, the data show that overall, “offshoring” from other countries to the U.S. is greatly benefitting the American economy.
As this chart shows, most foreign direct investment does not go to low-wage countries like China and Mexico—it goes to the United States!
U.S.-based multinational corporations employ 22.9 million Americans—more than twice as many people as they employ in China, Mexico, and all other countries combined. Foreign-owned multinational corporations employ another 5.5 million people in the United States.
When talking heads or campaigning politicians assert that outsourcing is costing the U.S. jobs, they’re telling only part of the story. The whole picture shows that U.S. workers do just fine competing for jobs in a global marketplace, and in fact the United States continues to win the war for global investment.